Title: Strategic Corporate Social Responsibility
1Strategic Corporate Social Responsibility
- MBA 292T.11
- 22 February 2009
- Professor Kellie A. McElhaney
2Todays class
- Morning
- Welcome intros
- CSR in the News
- Defining CSR
- CSR Frameworks Systems
- Afternoon
- CSR Reporting Communications
- CSR Cases
- CSR Strategy Development Assignment
- Personal SR Strategy Assignment
3CSR in the News
4CSR in the News
- Surprising survivors Corporate do-gooders
- As companies cut costs, social responsibility may
seem like an easy target. But many big names are
sticking with the program. - Tough season for Intel. Its stock price slipped
42 in 2008 and its fourth-quarter numbers were
poor, with net income off 90 from a year
earlier. Days before releasing its fourth-quarter
results, the company launched the Small Things
Challenge, a commitment of up to 300,000 to
education and development in countries like
Afghanistan, Cambodia, Haiti and Uganda in
partnership with non-profit groups Kiva.org and
Save the Children. - "You can't save your way out of recession - you
have to invest your way out," Intel chairman
Craig Barrett told Fortune. "We look at our CSR
activities in pretty much the same way you can't
just do them in good times and then just forget
about them in bad times and hope to get any
results."
5CSR in the News
- Surprising survivors Corporate do-gooders
- Starbucks' stock lost more than half its value in
2008. CEO Howard Schultz responded quickly,
outlining more than 400 million in cost
reductions for 2009. - There was one area that escaped relatively
unscathed corporate responsibility. While
Starbucks will cut some undisclosed costs, it
recently launched a (Product) RED card to benefit
African HIV and AIDS programs and plans to become
the world's largest purchaser of fair trade
coffee this year, among other efforts. - Short-term thinking in a recession can lead to
the "false belief that investments in people and
training can wait that corporate social
responsibility can be put on the back burner,"
Schultz wrote in a November essay in the
Huffington Post. "Now is a time to invest, truly
and authentically, in our people, in our
corporate responsibility and in our communities.
The argument - and opportunity - for companies to
do this has never been more compelling."
6CSR in the News
- Wal-Mart Mexico Inaugurates Largest Sun-Operated
Photovoltaic Installation in Latin America - Solar panels will generate 20 of the store's
energy requirements for a full year - 1,056 solar panels were installed on the roof of
Bodega Aurrera Aguascalientes - 140 tons of CO2 emissions will be eliminated
- In 2005, Wal-Mart Mexico committed to the
following sustainability efforts - 100 renewable energy sources by 2025
- Zero water discharges by 2025
- 25 increase in eco-friendly items by 2012
- Zero waste by 2025
-
7CSR in the News
- One Year On, Clorox's Green Works Dominates
Market - Clorox's green gamble appears to be paying off A
year after the company launched its Green Works
line of natural cleaning products, the brand has
established itself as a leader in the category,
capturing 42 market share.
8CSR in the News
- Times Square Advertisers Turn to Wind Power
- Thirty of the Times Square's iconic lighted
billboards - including Coca-Cola's long-running
red sign - have shifted to 100 wind power.
9CSR in the News
- Coca-Cola Enterprises Boosts Commitment to
Sustainability with Launch of Largest Hybrid
Electric Delivery Trucks in North America - Coca-Cola Enterprises (NYSE CCE) Chairman and
Chief Executive Officer John F. Brock announced
the deployment of the largest hybrid electric
delivery trucks in North America - CCE plans to deploy 185 hybrid electric trucks
across the United States and Canada in 2009,
bringing their total number of hybrid electric
delivery trucks to 327, the largest such fleet in
North America
10CSR in the News
- Starbucks and Service
- In celebration of Martin Luther King Jr. Day and
the Inauguration, Americans are being encouraged
to volunteer. Inspired by this effort and as
part of the Starbucks(tm) Shared Planet(tm)
commitment to communities, beginning January 21,
Starbucks is teaming up with HandsOn Network for
the "I'm In!" campaign - http//pledge5.starbucks.com/
- "I'm In" invites our customers to pledge five
hours to volunteer and connects them with
projects in their communities. Our goal is to
have one million hours pledged by January 25. - Offering a free cup of tall brewed coffee to
anyone who fills out a pledge card to celebrate
this call for service
11Intros This Course
12Professor McElhaney
- Has been on sabbatical for a year
- Wrote a book (see required reading)
- Consulted
- Got told she looked like Sarah Palin
- Got a tattoo
- Worked in Haiti
- And is excited to be back in the classroom!
13Seriously
- Recovering banker since 1992
- University of Michigan (Ross) 1993-2002
- Professor at UC Berkeley since 2002
- Founding Director, Center for Responsible
Business - Ranked 1 in world by Financial Times in 2008
Ranked 2 in country by WSJ in 2006 2007 - Extensive Corporate consulting Gap, HP, Nokia,
Erste Bank, eBay, Navigant, McDonalds, Blue
Cross, Statoil, Nvidia, Kimberly Clark, Twitter - Research focus areas Strategies of CSR
Branding CSR Diversity CSR - Book called Just Good Business out in Fall 2008
14Who Are You?
- Name?
- Occupation?
- Why did you take this course?
- Whats your passion?
15This Course Is
- About business strategy
- Real-world, current, emergent
- Fast-paced, packed in, like drinking from a fire
hose - Taught using multiple methods
- A unique learning experience
- Experiential, hands-on, active
- Something that will stay with you
16This Course Is Not
- Typical b-school course with HBS cases
- Traditional, straight-lecture, cut and dry,
neatly packaged - For the close-minded or risk-averse
- Good for passive non-participators in learning
- For those who like to skip classes
- For those attached to their lap tops, PDAs and
cell phones
17Defining CSR
18Dr. Suess Did it Best (1971)
19Unless.
20What is CSR?
Safe products?
Solving social problems?
Workplace diversity?
Environmental impact?
Risk management?
Employee treatment?
Philanthropy?
Employee volunteerism?
Human rights?
Sustainable development?
Business ethics?
Corporate governance?
Transparent reporting?
Sponsorships?
PR?
How would you define CSR?
21Please Be Clear
- The C is the most important aspect
- CSR is about making money
- You can do well from doing good
- You must talk about it
- You cant lead (consumers) with it (yet)
- No company is 100 good or 100 bad
22CSR is
- A business strategy that
- Creates wealth
- Protects wealth
- It is about using the power of business to
improve the world.
23A Company Who Gets It Whirlpool
24Whirlpool Habitat for Humanity
- 25M commitment in 1999
- Given 34M, plus 73,000 appliances to 36,000
homes - Pledged to give through 2011
- Launched Building Blocks initiative in 2006,
sending over 1000 employees more volunteers to
build an entire block - Was philanthropy became a brand message
- We make very large, very heavy metal machines,
often with big motors. This puts a human face on
what could be a very cold metal category. - Sponsored Reba McEntire Habitat for Humanity Tour
25Has Business Impact
26Its an Integrated Strategy
27What would it take for Wal-Mart to be that
company, at our best, all the time? What if we
used our size and resources to make this country
and this earth an even better place for all of
us customers, associates, our children, and
generations unborn? - Lee Scott, CEO, October
2005
Another Company That Gets It
28Wal-Marts Sustainability Goals
292008 The Company of the Future
301 Employee/ 1M Dollar Impact
31A Short Story in Three Parts
32Short Story Part One
- The Role of the Private Sector
33Shift in Power
2007 2007 2007
Company/Country Revenue (Fortune Magazine)GDP (World Bank)millions, USD
1 United States 13,201,819
2 Japan 4,340,133
3 Germany 2,906,681
4 China 2,668,071
5 United Kingdom 2,345,015
22 Exxon Mobil 339,938
23 Poland 338,733
24 Austria 322,444
25 Wal-Mart Stores 315,654
26 Norway 310,960
27 Saudi Arabia 309,778
28 Royal Dutch Shell 306,731
29 Denmark 275,237
30 BP 267,600
34Shift in Trust
Trust in business at all-time low (lower
than post-Enron)
Edelman Trust Barometer, 2009
35Want Government Regulations
36Want to Act Personally
37Need to Hear CSR Messaging
38Short Story Part Two
- The Challenges of our World
39Challenges of our World
40The Third Part is a piece of a Solution
Corporate Social Responsibility (CSR)
41CSR Has Gone Mainstream
42CSR is Everywhere
43Defining CSR
- Net Impact
- Using the power of business to improve the world.
- Business for Social Responsibility (BSR)
- Companies being able to be commercially
successful in ways that demonstrate respect for
ethical values, people, community, and the
environment. - A Corporate Strategy Definition (McElhaney,
1998) - A corporate strategy that is integrated with (1)
core business objectives (2) core competencies
to create financial and social/environmental
returns, and is embedded in corporate culture and
day-to-day business operations.
44Strategic CSR
- CSR Strategy must fit two things
- Core business objectives
- Increase sales, penetrate new markets, engage
employees, reduce operating expenses, improve
reputation, protect brand, beat competitors - Core competencies
- Technology, financial products services, making
markets, natural food, automobiles and
transportation systems, travel tourism.
45Global Citizenship/ CSR/ Sustainability
- Employee Engagement
- Community Investment
- Philanthropy
- Government Public Relations
- Governance Ethics
- Environmental Footprint
- Supply Chain/ Sourcing
- Social/ Environmental Impact of Products
Services
46A Typical Corporate Strategy
Hewlett Packard, 2006
47A Typical CSR Strategy
Cause marketing
Supply Chain
Community investment
Safe products
Enviro management
NGO pnerships
Human rights
Employee volunteerism
Fair employee treatment
Philanthropy
Product give-aways
Business ethics
Corporate governance
Social/ environmental reporting
Sponsorships
Workplace diversity
48A Lost Opportunity
to utilize CSR as a powerful integrated
business strategy, not an add on.
49What People Think CSR Is
- Spending (a little bit of) the (whole lot of)
money that you make.
50What CSR Really Is
- How you make (the whole lot of) money that you
spend.
51 CSR is not about how you spend the money you
make. Its about how you make the money you
spend.
52The Triple Bottom Line
Triple Bottom Line
J. Elkington, SustainAbility
Social
Economic
Environmental
53Internal External CSR
Transparency
Governance
Supply Chain
Mission, Vision, Values
Reporting
Compensation/ Benefits
Stakeholder Engagement
Environment
Ethics
Diversity
Human Rights
Socio-political Issues
Health Wellness
Community Engagement Investment
Accountability
Downsizing Layoffs
Privacy
Work Life Balance
Philanthropy
Marketplace
Job Satisfaction
54Defining CSR Most Important Thing a Company Can
Do to Be Seen as Socially Responsible
Source Globescan 2005
55What does it mean to be a good Global Citizen?
Source 2006 Fleishman Hillard/National Consumers
League study, Rethinking Corporate Social
Responsibility
56Stages of CSR
Sweet Spot
57CSR Frameworks
58Framework 1 The Changing Social Contract
Source The McKinsey Quarterly , 2006
59Framework 2 Triple Bottom Line
ECONOMIC
SOCIAL
ENVIRONMENTAL
PEOPLE, PLANET, PROFIT
60Framework 3 Modified BITC
Workplace
Community
- Employees
- Retirees/alumni
- Recruits
Marketplace
- Clients/customers
- Regulators/legislators
- Investors
- Academics
- Suppliers
Environment
- Communities in which we live and work
- Not-for-profit and non-governmental organizations
that support communities
- Physical environment
- Not-for-profit and non-governmental organizations
that support the environment
61Framework 4 Legal and Moral Liability
SustainAbility, Executive Summary The Changing
Landscape of Liability, January 21, 2005
62Framework 5 Risk-Opportunity Continuum
MAXIMIZE OPPORTUNITY
MINIMIZE RISK
- Use core assets in a positive way, to improve
underlying business context - Take a big-picture view
- Go beyond compliance
- Lift or stabilize reputation
- Prevent damage to reputation
- Forestall the negative use of core assets
- Focus on compliance and managing legal liability
63Framework 6 Shared Value
- The essential test that should guide CSR is not
whether a cause is worthy but whether it presents
an opportunity to create shared value that is,
a meaningful benefit for society that is also
valuable to the business.
Social Dimensions of Competitive Context Social
issues in the external environment that
significantly affect the underlying drivers of a
companys competitiveness in the locations where
it operates
Generic Social Issues Social issues that are
not significantly affected by a companys
operations nor materially affect its long-term
competitiveness.
Value Chain Social Impacts Social issues that
are significantly affected by a companys
activities in the ordinary course of business.
Source Porter, Michael E. and Mark R. Kramer,
Strategy Society The Link Between
Competitive Advantage and Corporate Social
Responsibility, Harvard Business Review, 2006
64Framework 6 Shared Value
Generic Social Issues
Value Chain Social Impacts
Social Dimensions of Competitive Context
Good citizenship
Mitigating harm from value chain activities
Strategic philanthropy that leverages
capabilities to improve salient areas of
competitive context
College Bound
Transform value chain activities to benefit
society while reinforcing strategy
Responsive CSR
Strategic CSR
From Porter, Michael E. and Mark R. Kramer,
Strategy Society The Link Between Competitive
Advantage and Corporate Social Responsibility,
Harvard Business Review, December 2006
65Framework 6.5 Changing the Game
Offensive CSR can distinguish a companys
reputation but cannot protect it defensive CSR
can protect a reputation but cannot distinguish
it. Both are necessary to succeed in todays
business climate.- Kramer Kania, Changing
the Game
66Designing a CSR Structure Nine Steps (BSR)
- Understand drivers (internal external)
- Identify key CSR issues
- Identify evaluate stakeholders
- Identify current functions supporting CSR
- Analyze current CSR systems, culture
- Design CSR structure
- Develop effective staffing plan
- Create cross-functional system
- Match budget to best framework
67Stages of corporate citizenship BC CCC
68Stages of CSR
- Defensive
- Its not our job to fix that
- Company faced with pain, criticism, reacts
defensively - Compliance
- Well do just as much as we have to
- Cost of doing business, do just as much as need
to - Managerial
- It is the business
- Moves CSR to core business managers functions
- Strategic
- It gives us a competitive edge
- Realigns strategy to use CSR as competitive
advantage - Civil
- We need to make sure everyone does it
- Need to involve all in sector, collective action
69A CSR Continuum
Philanthropic
Transactional
Integrative
Growth stage
Level of engagement Low High
Importance to mission Peripheral Strategic
Magnitude of resources Small Big
Scope of activities Narrow Broad
Interaction level Simple Intensive
Managerial complexity Infrequent Complex
Strategic value Modest Major
EXAMPLES ACTIONS Donation Grants Event sponsorship Cause-related marketing Employee volunteerism Joint-advocacy Joint-action Deep partnerships Financing principles
Adapted from The Collaboration Challenge, James
E. Austin
70CSR Report Analysis
71CSR Report Analyses
- What are the report's strengths weaknesses?
What are your specific recommendations for
improvement? - Did the report change your opinion of this
company? - Would the report change your likeliness to work
for this company, or purchase their goods/
services as a consumer? - Based on the report, what do you think are the
key issues for this industry and how well is this
company addressing these issues? - Also consider the following issues
-
- Does/ how does the company define CSR? How
evolved is the companys view of CSR? - How integrated is their CSR strategy? Is it
aligned with core business objectives, core
competencies? - How sustainable is their CSR strategy?
- What are the metrics for success? How do they
measure their CSR impact? - Who seems to be the targeted audience(s)? Is
this clear from the report? - What are the opportunities associated with their
CSR strategy? Risks? Strengths? Weaknesses?? - From a pure document aspect, assess the strengths
and weaknesses of the report?